Term Sheet — Thursday, December 1

ET CETERA

Dumb Pipes, Skinny Bundles and One Big Merger: Last night I stopped by Recode’s Code Media event in midtown Manhattan, where Turner CEO John Martin talked about the AT&T-Time Warner deal to a crowd of media execs. (Reminder: Turner is owned by Time Warner.) A few notes:

• Martin was the CFO of Time Warner when the company spun out Time Warner Cable in 2005. The rationale then was that it didn’t make sense to have a “dumb pipe” company alongside a content company. How is teaming up with AT&T now any different? In short: Scale. Time Warner Cable was regional. AT&T, with DirecTV and its mobile carrier service, is national. Also: Data. Martin admits that he didn’t realize how important data would transform how Time Warner monetizes its audience. AT&T brings immense access to data analytics.

• It would be “a moronic thought” for Time Warner’s content, like HBO, to become exclusive on one of AT&T’s distribution platforms because it would ruin the value of HBO, he said. But a few minutes later, he said Time Warner may consider making exclusive premium content for mobile devices or DirecTV.

• The media world is constantly debating which is king: content or distribution. Martin argues it’s neither. User experience is king. Over time, it may be strategic for Time Warner to own the ”end-to-end user experience”

• Skinny bundles are the future because “there are too many shitty networks that have to go away,” and pared-down packages of streaming cable channels would wipe them out. None of Turner’s networks in fall into the “shitty” bucket, though. “I feel good about the concentrated value of our networks,” Martin said.

State of Startups: First Round Capital released its annual survey of more than 700 startup founders this morning. It paints a picture of a complicated, sometimes contradictory crew of people. Which isn’t surprising – you have to be at least a little irrational to start a startup. Case in point:

• Nearly 20% are certain their companies will be worth $1 billion, but just as many had to lay off staff this year.

• The number one reason those surveyed believe their company could fail is an inability to raise follow-on capital. Not bad execution, not a lack of product-market fit, not burn rate. And yet! Only 39% are optimizing for profitability, versus 61% optimizing for growth. That explains why a majority (51%) said their burn rate is higher than it was a year ago. Only 13% are already profitable.

• 57% believe we’re in a bubble (down from 73% last year). A majority think it’ll get harder to raise capital in the coming months, and two thirds think investors will have the upper hand going forward. And yet! There’s that pesky optimism, with only 15% admitting their company is not likely to be worth $1 billion or more.

Irrationality can manifest itself in frustrating ways:

• On average, respondents think gender and ethnic parity in the startup world is just 14 years away, despite the fact that 11% of them currently run companies with companies with zero women employees and 61% of them have all-male boards. Late stage companies are the worst offenders, with a three times higher likelihood of not having a single woman on their board.

The Age of Unicorns: They’re almost as rare as their name suggests these days, but yesterday a real life unicorn got its horn. Or something. Opendoor, a startup that buys and sells houses, has raised an eye-popping $210 million in funding from Norwest Venture Partners. Bloomberg reports the round values the company at $1 billion or more. This round was widely shopped around the Valley, and the investors I spoke to that passed on it expressed a glaringly obvious concern: What happens when the housing market turns? Opendoor could be left holding some very expensive illiquid assets.

But the bullish ones argued that it was worth the risk: This is an obvious untapped market in need of a good software-enabled fix. Opendoor could be the CarMax of houses. CarMax is a profitable, $11 billion (market cap) car sales company with $15 billion in annual sales. And houses are worth ten times more than cars.

Self-Driving Car Talk: Term Sheet readers will remember George Hotz, the founder of self-driving car startup Comma.ai that canceled his company’s plans to make aftermarket kits after the NHTSA sent him a threatening letter. Yesterday he held a press conference at his house to announce his startup would open his company’s code to the world. Now people can use this software to build their own self-driving kits. (What could go wrong!?) The move is a way to circumvent regulators and it turns Comma.ai into a network company, not a hardware company. My colleague Kirsten Korosec notes that Hotz’s venture investors fully supported the move:

“I was amazed when I first suggested open sourcing to them; I thought I was going to have fight this battle, and no battle!” [Hotz] said. “They loved it. I really think Andreessen understands where the future is going, whereas some of these older automakers just fundamentally do not.” Read the full story here.

VENTURE DEALS

• Opendoor, a San Francisco startup that buys and sell homes, raised $210 million in funding. Norwest Venture Partners led the round, and was joined by NEA, Khosla Ventures, and GGV Capital. Read more at Fortune.

•Osterhout Design Group, a San Francisco augmented and virtual reality smartglasses manufacturer , raised $58 million in Series A funding. 21st Century Fox led the round, and was joined by Shenzhen O-film Tech Co., Vanfund Urban Investment & Development Co., and others. Read more at Fortune.

• TraceLink, a Wakefield, Mass.-based provider of supply chain management software for life sciences businesses, raised $51.5 million in Series C funding. Goldman Sachs Growth Equity led the round, with participation from FirstMark Capital, Volition Capital, and F-Prime Capital.

• SendGrid, a Denver , Colo.-based company that provides email and other marketing software to businesses, raised $33 million in Series D funding. Bain Capital Ventures led round, and was joined by the Foundry Group, Bessemer Venture Partners, and SoftTech VC.

• Qstream, a Burlington, Mass.-based developer of gamification and analytics software for sales teams , raised $15 million in Series B funding. Polaris Partners led the round, and was joined by Frontline Ventures, Launchpad Venture Group, and Excel Venture Management.

• VictorOps, a Boulder, Colo. maker of real-time monitoring software for IT teams, raised $12.2 million in Series B funding from Shea Ventures, Foundry Group, and Costanoa Venture Capital.

• Dubsmash, a Berlin video and lip-syncing mobile app, raised €9 million ($9.6 million) in Series B funding, according to TechCrunch. Sunstone Capital led the round, and was joined by Index Ventures, Balderton Capital, Eniac Venture, and Lowercase Capital. Read more.

• AttackIQ, a San Diego, Calif.-based cybersecurity company, raised $8.8 million in Series A funding. Investors include Index Ventures, Qualcomm Ventures, and Telstra Ventures.

• Rhumbix, a San Francisco company that develops and delivers a mobile platform for construction field supervision, raised $6.2 million in funding, according to an SEC filing.

• JetClosing, a Seattle software company that develops applications for the real estate closing process, raised $2.3 million in seed funding, according to an SEC filing.

• WorkRamp, a Palo Alto developer of employee training software for enterprises, raised $1.8 million in seed funding. Susa Ventures led the round, and was joined by Y Combinator, Haystack, and angel investors including Alexis Ohanian and Garry Tan.

• Get Smart Content, an Austin-based marketing company that provides targeting and A/B testing solutions for businesses in the travel industry, raised $1.75 million in funding. Origin Ventures led the round.

• Vector Media, a New York City advertising agency that specializes in transit and other out-of-home marketing, raised an undisclosed amount of funding from Spire Capital Partners.

PRIVATE EQUITY DEALS

• McDonald’s (NYSE:MCD) has neared a deal to sell its China and Hong Kong stores to an association headed by The Carlyle Group (NasdaqGS:CG) and Citic Group Corp for up to $3 billion, according to a report in Reuters. Read more.

• DBi Services, a Sterling Partners portfolio company, has acquired the assets of Mercier’s Inc., a South Point, Ohio-based provider of on-track railroad vegetation management and herbicide applications. No financial terms were disclosed.

• The Wellness Network, a New York City-based in-hospital health TV networks operator backed by Wafra Partners, has acquired the assets of Bundoo, a Palm Beach Gardens, Fla. pregnancy and parenting website. No financial terms were disclosed.

OTHER DEALS

• Parker-Hannifin Corp (NYSE:PH) , which manufactures motion and control systems for the industrial and aerospace markets, has agreed to buy Clarcor Inc (NYSE:CLC) , an air filtration systems provider, for about $4.3 billion including debt, according to Reuters. At $83 per Clarcor share, Parker-Hannifin's offer represents 17.8% premium on the company’s closing price Wednesday. Read more.

• To help pay for its purchase of Swiss herbicide and seed care company Syngenta (SWX:SYNN) , China National Chemical Corp is seeking to raise $5 billion for a new fund. Read more at Fortune.

IPOs

• AppNexus, a New York City-based developer of automated, online-advertising software, has confidentially filed paperwork for an initial public offering that would value the company at between $1.5 billion and $2 billion, according to a report in the Wall Street Journal. AppNexus was last valued at $1.8 billion. Read more.

• Invitation Homes, a Dallas-based company that owns and manages renovated single-family homes for rent, has filed confidentially for an initial public offering, according to the Wall Street Journal. The company plans to sell about $1.5 billion and could be worth around $7.5 billion. Invitation Homes is backed by the Blackstone Group. Read more.

EXITS

• Fitbit (NYSE:FIT), a fitness band maker, is close to acquiring Pebble, a Redwood City, Calif.-based smartwatch maker, according to a report in The Information. While the price is unknown, it’s thought to be small. Pebble launched on Kickstarter in 2012; it quickly became one of the most popular campaigns on the crowdfunding platform, raising a total of $12.8 million. But the company has since run into financial struggles, laying off a quarter of its staff earlier this year. In addition to its Kickstarter funding, Pebble raised $15 million from CRV. Read more (subscription required).

• Kayne Anderson Capital Advisors has sold Silver Hill Energy Partners, a Dallas-based oil and gas production company, to RSP Permian for about $604 million in cash and 15 million shares of RSP common stock.

• PAI Partners and Goldman Sachs Merchant Banking have sold the Xella Group, a Duisburg, Germany-based building material manufacturer, to an affiliate of Lone Star.

• Geneba Properties N.V., an Amsterdam commercial real estate company backed by The Catalyst Capital Group, is exploring strategic alternatives including an initial public offering, capital increase, merger, sale, or other possible transactions.

FIRMS + FUNDS

• Former Boston Red Sox player David “Big Papi” Ortiz, along with several other ex players, is launching a private equity firm. Called Dugout Ventures, the firm will focus on investing in baseball-related companies.

• The Alexa Fund, Amazon’s (Nasdaq:AMZN) venture arm, is launching a Techstars accelerator, which will focus on making investments in connected home, wearables and hearables, enterprise, communications, connected car, and health companies.

• Radian Capital, a New York City-based venture and private equity firm founded by Weston Gaddy and Jordan Bettman, has raised $36 million of a $75 million target for its first fund, according to an SEC filing.

• Four Rivers Group, a San Francisco-based venture capital firm focusing on expansion investments, raised $87 million for its fourth fund, according to an SEC filing.

• Jungle Ventures, a Singapore-based, early-stage venture capital firm, raised $100 million for a new fund that will focus on investments in Southeast Asia, according to TechCrunch. Read more.

NEW JOBS

• Raj Atluru and Anup Jacob have joined Element Partners, a Wayne, Pa.-based private equity firm, as general partners and managing directors. Atluru was most recently a founding partner at Silver Lake Kraftwerk. Jacob previously helped lead the Deutsche Bank Masdar Cleantech funds.

• Zavain Dar is now a principal at Lux Capital, a New York City-based venture capital firm. Dar was previously a senior associate. He joined the firm’s Menlo Park office in 2014.

• Matt Upton, John Jansen, and Sugeet Madan have joined Tokyo-based Mizuho as head of software investment banking, head of technology M&A banking, and managing director in technology coverage banking, respectively, according to Business Insider. All three will work out of the bank’s San Francisco office. Read more.